Private sector jobs rose by 90,000 in September, better than expected, ADP reports
The ADP report indicates a robust increase in private sector jobs, adding 90,000 in September, well above the anticipated 68,000. This stronger-than-expected employment figure bolsters the Federal Reserve's hawkish outlook, particularly as markets await the crucial non-farm payroll data later this week. The job growth, particularly in health care, is likely to signal economic resilience, prompting considerations of sustained higher interest rates from the Fed.
Where it sits in our coverage
Our consensus EUR/USD target sits at 1.075 (median across 8 firms), with Goldman at the upper bound (1.12) and BofA at the lower (1.04). CNBC's report highlights a positive trend in job creation, aligning with the potential for upward moves in the dollar as traders adjust expectations for monetary policy.
How firms align
Aligning with the positive sentiment from the ADP report, JPMorgan is forecasting a target of 1.10 for EUR/USD, indicating confidence in dollar strength as employment figures improve. However, BofA stands in contrast at a lower target of 1.04, suggesting a more cautious outlook towards the currency pair. See our internal /reports/jpmorgan and /reports/bofa for their latest perspectives.
What the data shows
The surprise in September's job gains may lead to upward adjustments in forecasts, suggesting that markets could expect a tighter labor market ahead. Investors should stay attuned to potential changes in Fed communications as seen in /research/jobmarketoutlook.
How firms align with this view
Aligned with the headline view
Contrary positioning
Key takeaways
- 01ADP's 90k job addition outpaces the 68k forecast, signaling economic strength.
- 02Markets should consider Fed policies more hawkish, impacting USD positively.
- 03Watch for potential volatility in EUR/USD, especially around NFP release at 1.075.
- 04Stronger jobs data raises the possibility of revised rate hike expectations.
Market implications
Focus on the upcoming NFP report, with consensus suggesting a confirmation of strong job growth. Levels around 1.075 for EUR/USD will be pivotal, as traders reassess risk premia and Fed trajectories following the data.
Risks to this view
A significant deviation in the NFP report, particularly if job numbers fall below expectations, could reverse the bullish sentiment seen in the dollar. Additionally, any dovish signals from Fed officials may invalidate the current projections.
Sentiment by currency
USD+EUR JPY GBPComposite USD score: +0.65
Sources & References
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